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09
October 2012

Real health costs about the same as owning a car

$7,500 a year per person. That’s the approximate amount spent on health care in the U.S. by all sources, including government, private employers, and individuals, according to the National Business Group on Health. That’s about the same as the average per-person annual total cost of owning a car, according to figures from the Bureau of Labor Statistics.

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I am intrigued about the cost of Health Care compared to ownership of an auto. I cannot attest to the cost of Health Care from all sources as listed, that amounts to $7500 per year per person. The figure may well be a reasonable dollar amount, or possibly a bit low. I was curious about the comparison to auto ownership. I have purchased a 2011 Honda Accord right off the dealership lot with 6 miles on the odometer, so it is “New”. It is 18 months old at the time of writing, so I have a feel for operating costs to date. I plugged in dollar values into the Bureau of Labor Statistics link to check on the estimated annual cost for the vehicle. The calculator initially asked for Annual cost for the vehicle, but I plugged in THE ENTIRE RETAIL COST (not annual cost) $25,000. Annual finance charge over five years (525.00) but I used $125.00/year. I get consistently 30 mpg and drive about 800 miles per month. I used $1200 for gas/oil (overestimate). Insurance cost is $1000 per year, $0 maintenance or rental as yet, but I used $500 and $200 respectively for an annual dollar figure. The Bureau of labor Statistics calculates about 30% – 35% of the annual $7500.00. Now the calculated dollar amount shown is for a single (one) person, If two people share the auto, the cost per person goes down by 50%. should the vehicle be utilized for a family with 2.3 children, the cost per person is reduced again. I looked into generating a LUXURY auto and ran numbers with a $58K auto and twice the operating costs (just for S’s & G’s). the operating costs still did not come close to $7500.00 per person. Even utilizing the full retail cost.

Am I missing something in the calculation? I did not fully look at ALL costs for housing etc on the Calculator, perhaps the percentage shown for auto ownership may change.

Admittedly my annual cost from my feeble calculations of a 10 year life span of my vehicle puts an annual operating cost of closer to $5500 per year, once again, that is for a single (one) person, no family member(s)in that dollar amount. The Bureau of Labor Statistics calculator may not give an accurate view if you only plug in auto costs. Give it a try on your own and let me know if you get similar results or if I am all wet.

Paul

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